Correlation Between Etsy and Global E
Can any of the company-specific risk be diversified away by investing in both Etsy and Global E at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Etsy and Global E into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Etsy Inc and Global E Online, you can compare the effects of market volatilities on Etsy and Global E and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Etsy with a short position of Global E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Etsy and Global E.
Diversification Opportunities for Etsy and Global E
Very good diversification
The 3 months correlation between Etsy and Global is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Etsy Inc and Global E Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global E Online and Etsy is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Etsy Inc are associated (or correlated) with Global E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global E Online has no effect on the direction of Etsy i.e., Etsy and Global E go up and down completely randomly.
Pair Corralation between Etsy and Global E
Given the investment horizon of 90 days Etsy is expected to generate 2.24 times less return on investment than Global E. But when comparing it to its historical volatility, Etsy Inc is 1.23 times less risky than Global E. It trades about 0.25 of its potential returns per unit of risk. Global E Online is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest 3,849 in Global E Online on August 27, 2024 and sell it today you would earn a total of 1,353 from holding Global E Online or generate 35.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Etsy Inc vs. Global E Online
Performance |
| Timeline |
| Etsy Inc |
| Global E Online |
Etsy and Global E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Etsy and Global E
The main advantage of trading using opposite Etsy and Global E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Etsy position performs unexpectedly, Global E can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Global E will offset losses from the drop in Global E's long position.The idea behind Etsy Inc and Global E Online pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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